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Energy: U.S. Official Urges Reforms In Producer Countries

Oil derricks in the Caspian Sea near the Azerbaijani capital, Baku (file photo) (AFP) With energy security quickly moving up on its agenda, the U.S. administration is putting pressure on oil- and gas-rich countries to open up their economies and initiate political reforms. U.S. Assistant Secretary of State for Economic and Business Affairs Anthony Wayne told a seminar in Brussels today that producer countries in Central Asia, the Caspian region, and elsewhere risk missing out on the investments necessary to develop their resources.

BRUSSELS, May 22, 2006 (RFE/RL) -- Securing new energy supplies has become an increasingly pressing challenge for the United States and other developed countries faced with spiraling global demand for gas and oil.

According to the U.S. Assistant Secretary of State Anthony Wayne, the countries surrounding the Caspian Sea with their “underexploited” oil-and-gas reserves could have a key role to play to help meet that demand.

Transparent Investment Regimes

Speaking in Brussels before an audience of diplomats, EU officials, and journalists, Wayne said finding the money to develop these resources will be difficult without “open and transparent investment regimes.” The countries will also need to be stable and capable of ensuring the physical safety of their energy infrastructure.

Wayne singled out Central Asia and Azerbaijan as key targets for U.S. and EU efforts.

“We are working -- as I know the European Union is working -- to engage with a number of these key countries around the world, for example, in Central Asia, [and] in the Caspian," Wayne said. "We have an energy dialogue with Azerbaijan where we address issues such as regulatory reform, environmental and technology issues, investment climate, energy efficiency.”

He said Latin America is another region of key strategic importance for the United States.

Wayne argued that as well as helping meet the world’s energy supply needs, opening up will help the countries in question attain their own development goals. He said that lack of transparency encourages “cronyism,” stifles the rule of law, and undermines efforts at genuine reform.

Going Easy On Moscow

Although the United States and other Western countries have earlier criticized Russia for using energy as a political tool, limiting outside access to its energy market and pipelines, and failing to create a secure investment environment, Wayne today chose not to highlight Moscow’s shortcomings.

U.S. Assistant Secretary of State for Economic and Business Affairs Anthony Wayne (official site)

He noted that Russia’s current chairmanship of the Group of Eight (G8) leading industrialized nations has made global energy security its main focus.

Wayne said that all G8 countries need to ensure the transparency and reliability of energy supplies, but indicated Russia could achieve this through “greater integration” with global structures.

“We believe that we should encourage Russia to engage in greater cooperation, for example, with the International Energy Agency as a non-member country," Wayne said. "And we support greater Russian integration into the global energy system based on market-oriented principles.”

Moving To Market Dynamics

Wayne gave support to Russian attempts to charge higher, “market prices” from its neighbors for its energy supplies.

Wayne said the transition to market prices is a necessary development, allowing for the “more efficient utilization of limited energy supplies” in the world. He said the Russian-Ukrainian spat in January was a “reminder” of this.

Wayne also attacked what he described as “administrated pricing” -- the practice of keeping domestic energy prices artificially low that is used by China and other countries. He said “administrated pricing” insulates consumers from valuable market-based signals and encourages the kind of demand for energy that “markets would not ordinarily support.”

Caspian Energy Special

Caspian Energy Special

For a complete archive of RFE/RL's coverage of energy issues in the Caspian Sea region and Russia, click here.

HOW MUCH OIL? The U.S. Energy Information Administration has estimated that the Caspian could hold between 17 billion and 33 billion barrels of proven oil. ("Proven reserves" are defined by energy experts to be 90 percent probable.) Other experts estimate the Caspian could hold "possible reserves" of up to 233 billion barrels of oil. ("Possible reserves" are considered to be 50 percent probable.) By comparison, Saudi Arabia has 261 billion barrels of oil and the United States 23 billion...(more)

See also:

Economic Forecast For 2006 Sees Growth, But Danger In Continued High Oil Prices

How Vast Are The Riches In The Caspian?

Experts Envision A Future Beyond Oil

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